Premium Bonds, cash, gold, Bitcoin or shares – what’s the best last-minute Christmas gift? | Personal Finance | Finance


Each of these financial offerings has advantages, but some are riskier and more rewarding than others, so choose carefully. Here’s what you need to know.

Premium Bonds from National Savings & Investments (NS&I) are the nation’s most popular investment, held by around 23 million.

Parents and grandparents love giving them to kids, as they are backed by the Government which makes them secure, but offer the excitement of winning cash prizes.

The monthly prize draw includes two £1 million jackpots, and the chance to win smaller sums ranging from £25 to £100,000.

That sounds exciting but the annual prize rate is just one percent of your stake.

Anna Bowes, founder of Savings Champion, said there is a danger recipients could win nothing on Premium Bonds over the course of a year. “The more you buy, the better your chances.”

For a more reliable return, consider cash instead.

Cash is king at Christmas with many parents and grandparents setting up children’s savings accounts.

Local building societies often give you the best deals. Dudley currently pays a variable 3.5 percent on deposits of between £10 and £150 a month.

Otherwise Halifax pays 2.5 percent on between £10 and £100 a month.

For lump sum deposits, HSBC MySavings pays 2.5 percent on balances between £10 and £3,000, and 0.25% above that.

Barclays Children’s Savings pays 1.51% on balances up to £10,000, then 0.01%.

Bowes said: “Don’t feel obliged to use your own bank or building society, but shop around for the best deal online.”

The downside with cash is that interest rates remain low while inflation soars, so the money could lose its value in real terms over the next year.

READ MORE: The 13 ways to boost your income this Christmas

Gold can make a glittering Christmas gift but the precious metal has lost some of its shine, falling almost five percent this year.

The gold price may struggle next year, too, said Laith Khalaf, head of investment analysis at AJ Bell. “Interest rates are expected to rise which will make cash and bonds look more attractive than gold, which pays no dividends or interest.”

Although gold is known as a safe haven, the price can be volatile, Khalaf said. “It fell 40 percent between 2011 and 2015, so it’s not for the faint-hearted.”

Bitcoin is sometimes called digital gold, many of its advocates now see it as a store of value.

However, the cryptocurrency remains hugely volatile. It opened 2021 at $29,388 and peaked at $67,582 in early November, then fell back to around $50,000 today.

The chance to make big money on Bitcoin has probably passed and it is highly risky, with the Bank of England warning its value could fall to zero.

On the other hand, Twitter founder Jack Dorsey reckons it could replace the US dollar one day.

So which will it be? Nobody knows, Khalaf said. “You might as well roll a dice on a spinning roulette wheel.”

Bitcoin works best for those who fancy a flutter at Christmas.

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Stocks and shares have had another great year, with the FTSE 100 up around 12 percent and the US S&P 500 soaring 25 percent.

If investing for children, family and friends can’t invest up to £9,000 a year in a tax-free Junior Stocks and Shares Isa, from online platforms such as AJ Bell Youinvest, Bestinvest, Fidelity, Hargreaves Lansdown, Interactive Investor and Vanguard LifeStrategy.

Laura Suter, head of personal finance at AJ Bell, suggests three Junior Isa funds. Low-cost passive fund Fidelity Index World that tracks the global stock market, Liontrust Sustainable Future Global Growth, which targets green companies, and the highly successful Scottish Mortgage Investment Trust.

Fawad Razaqzada, market analyst at Think Markets, is cautious about the outlook for both shares and crypto in 2022. “Both have been driven by fiscal and monetary stimulus and could struggle if central bankers and governments are forced to cut this support.”

A blend of these different asset classes could make the perfect Christmas gift, if you can afford it.


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